Entrepreneurs’choice: risk or status quo ?
How well can entrepreneurs do if they take or don’t take risk? What can affect their decision making? Is it their experience ?Is it emotions? what about the quality of decision making ? do they always make the right decisions? How can an entrepreneurs improve their decision making ? Is it ok to make mistakes ? In this post I will focus on risk taking and status quo bias. The rest of questions posed earlier regarding the quality and improvement of decision making will be discussed in another post.
What does status quo mean ?
In marketing and economic psychology researchers use the term “status quo bias”. What does it mean anyway? It means (for entrepreneurs) to accept,do or follow the same choices that have been done or chosen before without changing anything. Entrepreneurs have been studied in research whether they fall under this phenomenon (status quo bias) or not. Well it appears that there are all types. Some small business owners prefer the status quo and don’t like to take risk (risk averse), while others take risk. The degree of risk also varies.Studies showed that small business entrepreneurs take more risk than big business owners or bankers. Entrepreneurs are also known of their use of heuristics and rely on their experience which researchers consider a type of status quo because they rely on their past experience. So in order for the entrepreneur to be status quo-free he/she must always be opened to new ideas and be willing to share with fresh minds.
What makes entrepreneurs take risk ?
Entrepreneurs are always optimists and enthusiastic to explore and discover new opportunities, find new technologies, to expand and grow & to be creative and build innovation. Sometime entrepreneurs appear to be over confident in their decision making , but confidence can be useful in some occasions.
Is it ok to make mistakes ?
“ A person who never made a mistake never tried anything new ” Albert Einstein.
The entrepreneurial tip of the day: Learn to take risk but above all, master the craft of managing risk.
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